US threatens to impose retaliatory 25% tariff on UK exports over ‘discriminatory’ tech firms tax

The US is pushing ahead with plans to impose tariffs of up to 25% on a number of UK exports in retaliation for a recently-announced British tax on tech firms, according to details released by the Biden administration.

Last April, the UK introduced a 2% tax on the revenues of digital companies – including e-commerce giants, search engines and social media companies – if they make money from British users.

The move sparked backlash from the US, leading to talks between Washington and London at the end of 2020 over America’s concerns that the measure is “unreasonable, discriminatory and burdensome” to firms based in California’s Silicon Valley.  

The US has previously taken issue with Austria, the European Union, India and Spain over their steps to impose a similar tax on tech giants.

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The UK government has defended the levy, claiming they are only seeking to ensure “tech firms pay their fair share of tax,” and telling both the sector and the Biden administration that the measure is designed to be “temporary,” while they work to “find a global solution.”

The Office of the United States Trade Representative (USTR) has set a date of May 4 for public hearings on the tariffs before moving forward to implement them. If they do come into effect, a USTR list shows that the tariffs could be levied on a wide range of items including perfumes, overcoats, board games, precious metals, footwear and beauty products.

In the event that the measures are imposed, a spokesperson for Prime Minister Boris Johnson’s government said that Britain “would consider all options to defend UK interests and industry.”

The trade action was originally started during President Donald Trump’s tenure but the Biden administration is showing no signs of halting its introduction, despite agreeing to suspend other tariffs last month. In February, Washington removed tariffs imposed by Trump over the UK’s decision to provide subsidies to Airbus, although it retained duties on British steel makers.

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